High-tech companies are increasingly focusing on health
Av The news broke in August that Spotify founder Daniel Ek and his investment company Prima Materia are investing €19 million, equivalent to SEK 220 million, in Swiss company Epiterna. The company aims to develop drugs that will extend the life of humans as well as pets.
That a tech entrepreneur ventures into the life science sector is not new. Large and small tech companies alike have been working on health innovations for several years, and investments appear to be on the rise.
The life science industry has different time cycles than other industries for which tech companies have long been developing solutions
“A high proportion of tech companies are either active or show an active interest in creating benefits in healthcare,” says Peter Kjäll, Business Policy Expert and Health Tech Lead at TechSverige.
According to Peter Kjäll, the long time span from idea to market approval is the reason why high-tech companies have previously refrained from investing directly in healthcare or life science.
“The life science industry has different time cycles than other industries for which tech companies have long been developing solutions,” he says, giving the banking and security sectors as examples.
The development of a pharmaceutical product can take 10-15 years, and even medical devices are often slow in development. According to Peter Kjäll, the healthcare sector has not previously drawn much inspiration from other sectors, but this is about to change. In turn, this development has contributed to tech companies turning more and more towards healthcare.
Anna Lefevre Skjöldebrand, CEO of Swedish Medtech, can also see a trend of increased interest in life science among high-tech companies.
“It’s not a sudden shift in trend, it’s more about them advancing their positions,” she says.
How do traditional medical technology companies feel about players like Google and Microsoft developing products for healthcare?
“These huge companies are like ecosystems of their own. They are simply considered additional players to be reckoned with,” says Anna Lefevre Skjöldebrand.
These huge companies are like ecosystems of their own. They are simply considered additional players to be reckoned with
Peter Kjäll says that a significant proportion of TechSveriges approximately 1,500 members work with health or life science in one way or another. They range from multinational companies, such as Microsoft, to small companies developing an AI application, for example. Their common denominator is that they provide services to the healthcare or life science sector using information technology.
The driving force for entrepreneurs entering the healthcare sector is to bring about change, according to Peter Kjäll.
“Tech entrepreneurs like Daniel Ek are frustrated and want to take a new approach. They want to change the current system and the way it works today because it is too slow and because they believe they can make a difference and improve the sector they are entering.”
While the tech giants are difficult to compete with, they can also help create systems that facilitate the management of regulations for smaller companies
In the past, it may have been the case that tech companies were more likely to target consumers, while medical device companies focused on delivering to the healthcare sector. However, today, Anna Lefevre Skjöldebrand and Peter Kjäll agree that generalisation is no longer viable.
“There is a movement in both directions. Major healthcare investments made by tech companies are based on the assumption that healthcare systems must ultimately use the products in some way, directly or indirectly. Otherwise, they will never be attractive enough for the consumer market either. At the same time, more and more medical technology is being sold directly to the customer from the manufacturer,” says Anna Lefevre Skjöldebrand.
The new European MDR and IVDR regulations are complicating things for many small traditional medical device companies. In contrast, some of the tech companies, the huge players such as Google, are benefiting.
“They have the advantage of possessing massive financial muscles, which allows them to recruit lawyers who can help them deal with the complexity of the regulations. For small companies, this represents both a threat and an opportunity. While the tech giants are difficult to compete with, they can also help create systems that facilitate the management of regulations for smaller companies,” says Anna Lefevre Skjöldebrand.
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